Housing Sector Unaffected By Rising Mortgage Rates

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... the the ... welcome back to the south in two months mortgage rates have jumped a full percentage point something has this happened only twice since nineteen ninety four ... what impact will that have on the housing market Wall Street Journal's expert on housing nicked tomorrow's joins us now mecca morning they will face here next time a pink as only update for you now have ... turned in a silk purse not explain the mechanism ... for people about why ... people know this intuitively that housing mortgage rates have the impact housing prices ... will ... regret now what's been happening prices of in the lineup ... when rates go up that's gonna hurt sellers ability to ask for more prices because people shot based on the monthly mortgage payment when rates go up ... that's can dance and affordability so if you are taken in June about with senior home for five percent more than the guy who just sold it down the street ... aam ... and rates one up well you know the Fed or the markets are Denver Nanking to everyone when they just took away your ability to ask for the next five percent for the next ten percent because of ... that every percentage point up in rates ... Hertz affordability by ten percent wow ok ... now ... is this enough to change psychology for buyers and still use seniors in your story it's still ... a seller's market though is that true there well if you look at inventory and we're still very low tones rising and one question I have this really can have a bunch of ... un realistic sellers here that have been reading the newspaper headlines ... the first half of the store to say hey ... aam then ask for ... you know some ridiculous price on the house and we begin to see a mentor come up but it's still a seller's market because ... a lot of these parts of the country were the were hit harder ... by the foreclosure bust ... inventory has fallen in you have two or three month supply of inventory very tight Still Favor sellers to the question now is ... how much of this increase even though ... mortgage rates were still very low by historical standards really have to go back to nineteen fifty ... to find lower rates ... before two thousand won and so too with ... the spirit in the last two years for rates of them really well but ... how much does the step up I mean we went up very quickly write ... to set very quickly rate ... and so people were looking to buy an April and May who said you know one of the three half percent millet re ... I can get four hundred thousand dollars of debt ... to buy four hundred fifty thousand dollar house ... the other now they are not unduly yet so they are either going have to ... put more money down to get the house the wanted ... or didn't have to scale back their purchase and buy a ... cheaper house now ... you mention one thing it's important ... not the dichotomy between ... the rest of the country and a place like New York City Hrabi Kai is in your story to import a lot of crazy buyers can you argue ... to keep it up to have gone away right aam ... that's deftly not will we see in Manhattan but Manhattan's tiny place and talk about internal laundry or Manhattan you can foreign buyers have spiders they seem pretty rate insensitive ... of the places in the U S The dumbass this ever been in California ... and those high cost markets if you're taking on more debt ... on which you are in California ... they're going to be more exposed to interest rates so the starter homes the hundred thousand dollars under twenty thousand dollar homes in Texas and Florida to find off the shelves ... the rate impact should be too much as long as those people are good credit qualified borrowers but if you're talking about four hundred thousand dollars ... seven hundred thousand or million dollar home purchase ... every little move and readers can have a bigger by its ... I'd put this in context of the most we've seen in the broader economy lately ... well I think the you know the Fed last week that Ben Bernanke he said the order to be monitored this because they know housing has been such an important driver ... of wait for the economy home prices ... that makes people feel better about their or their own economic situation lot of people that's their biggest asset ... and economy has been doing well right and we have a story from pre today saying ... that growth this is now people are revising down their forecasts for growth ... um you had a crazy there and so um I think ... housing is really important when people ask me is the housing recovery in trouble ... and I think the engines for now no we haven't seen a whole lot of evidence the will get some today with its existing home sales report ... but the bottom in two ways one is the new construction new home building ... that's still Beery low its depressed it's way below the median so has a lot a room for REITs the other question is discussed in this housing recovery so when people were talking about ... is the home price recovered and saw many you will see it ... home prices slow a little bit and that's probably a good thing because people been saying again in California and some of these boom to bust markets the prices going up ... too fast ... and so ... now they will go up ... no wonder they get I think with a genuine skinny dip a green light the Fed didn't bring the streets back down if they see any kind of pick up in the housing market I gotta mention ... the stock and I think so but again you you know what if they were looking at the center or no on versus going up too fast ... talk a little bit of a taper ... rates go up that kind of ... gets that that to ... the speculative end stock market and it made you will see kind of a more normal sustainable ... home prices will go up twenty percent a year loss biggest maybe that's a good thing ... I don't know a good thing to look at the rate at